Quebec shipyard looking to carve out a piece of national shipbuilding pie

OTTAWA — The Quebec shipyard that lost out to Halifax and Vancouver for billions of dollars in federal government work two years ago says it is ready to step in if its former competitors aren’t able to get the job done.

That could open up a potential avenue for the government should the $35-billion national shipbuilding strategy be in danger of running aground due to delays or cost overruns.

But it could also re-ignite a cross-country political dogfight the Conservative government had hoped was over when the work was handed out the first time around.

Davie Shipyards, near Quebec City, was locked out in October 2011 when Irving in Halifax and Seaspan in Vancouver were selected as the main shipyards for $33 billion in federal shipbuilding work.

The decision came after fierce lobbying by the companies as well as representatives from their respective communities and provinces, all driven by the promise of thousands of new jobs for the next 20 years if they won.

Davie’s loss wasn’t completely unexpected; the 185-year-old shipyard was insolvent, had been shut down for 18 months and was three weeks into new ownership when it submitted its bid in July 2011.

Still, the decision was lamented by Quebec politicians, and in an effort to appease those concerns, the federal government promised Davie would have a shot at the remaining $2 billion set aside for smaller coast guard vessels.

On June 26, the government announced the first tranche of funding for those small ships: $488 million in contracts to build 18-21 new Coast Guard lifeboats, research and science vessels.

Davie was purchased in November by Zafiro Marine, a European company that builds and operates ships for the oil and gas industry, and the company’s vice-president says it will be bidding on those small vessel contracts.

But Alex Vicefield said Davie also hasn’t given up on getting a piece of the $33 billion in work that went to Halifax and Vancouver.

“We’re watching the situation carefully at the moment,” he said in an interview. “It’s lots of ships over a long period of time. Anything can happen.”

Davie has poached the Irving official responsible for overseeing work on the navy’s new armed Arctic ships, as well as a vice-president of U.S. defence giant and Irving partner Lockheed Martin.

Vicefield said Davie has also ramped up its workforce to 500 and started work on ferries ordered by the Quebec government as well as specialized ships ordered by Norway’s offshore oil and gas industry.

The plan now is finishing those ships already under construction to prove Davie is back and ready to go to work for the federal government, Vicefield said.

A spokesman for the Public Works department, which is managing the shipbuilding plan, said Davie has not contacted the government before reiterating the decision to work with the shipyards in Halifax and Vancouver.

The Conservative government maintains the various aspects of the shipbuilding plan are proceeding on time and on budget.

Irving and Seaspan also say they are ramping up production and will be ready to complete the work that they have been assigned.

But Jerome Gaudreault, head of the Chamber of Commerce in Levis, where Davie is based, said there is palpable excitement in the community about having the shipyard back and eyeing a piece of the national shipbuilding pie.

“The shipyard is not 100 per cent ready, but they have all the docks and they can build those ships that were awarded to Halifax and Vancouver,” he said. “And we know that Vancouver has to do a lot of work to get their installations up to date.”

Defence Department documents obtained by Postmedia News show officials have raised questions over whether the Seaspan and Irving, in particular, can actually meet their contractual obligations and get their shipyards ramped up enough to begin work in time.

There is also a looming scheduling conflict when it comes to building the navy’s new resupply ships and the coast guard’s new polar icebreaker in Vancouver.

Meanwhile, the Parliamentary Budget Officer has raised concerns about the affordability of those resupply ships, while the auditor general will be releasing a report on the entire strategy in the fall.

Peter Cairns, president of the Shipbuilding Association of Canada, acknowledged the potential stumbling blocks facing the federal shipbuilding strategy, and said Davie’s re-emergence could be a positive development.

“It’s still got to show that it’s going to do the work it’s got to do right now,” he said. “But certainly if this shipyard can gear up and do what they’re planning and establish their bona fides, then I think it’s good.”

Yet Davie’s refusal to back down also opens up potential problems, particularly if it results in Quebec politicians and officials launching a new lobbying campaign to score some of the work already awarded to Halifax and Vancouver.

That is what happened with the last major naval shipbuilding program 20 years ago, when nine of 12 Halifax-class frigates were built by Irving in Saint John, N.B., while the other three were constructed by Davie despite higher costs and redundancies.

In an attempt to head off allegations of political interference and regional favouritism this time around, the Conservative government established an arms-length panel of federal bureaucrats to decide which of the shipyards was best positioned to do the work.

Vicefield says he doesn’t anticipate a major lobbying effort by Quebec politicians or the company; rather, he is ready to play a waiting game by first having Davie show it can do the work, and then standing ready in case the shipyards in Halifax or Vancouver stumble.

“I don’t think it needs political intervention for it to be clear that it’s the right shipyard to building the next generation of ships,” he said. “The case stands for itself, and we’ll prove ourselves by showing it to the federal government over the next few months.”